Billboard Changes proposed in North Carolina

The Charlotte Observer ran an editorial last week and an article yesterday opposing some  North Carolina billboard proposals. The Observer suggests that the proposals are extreme.  Insider disagrees.

First, the Observer objects to House Bill 578 which would increase the maximum cutting zone around billboards:

The “maximum cutting zone” for removing vegetation around billboards would increase from 340 feet to 500 feet. In 2012, lawmakers expanded it from 250 feet, so this increase is nearly twice as big. The new laws come as Charlotte strives to increase its tree canopy coverage to 50 percent, through the work of Trees Charlotte and others. This would make that job considerably harder.

Insider’s take:  This proposed change is in line with the rules of most other states.  Insider is aware of 13 states with a clear zone.  8 of the states have a clear zone of 500 feet or more.  North Carolina’s current restriction is tighter than all but one state in the United States.

Then the Observer objects to House Bill 579 which would require North Carolina, like almost all other states, to pay fair market value when a billboard is condemned.

Governments would have to pay billboard companies far more money to remove existing signs for a public works project. Under current law, the state has to pay for the value of the property and the sign. Under the new law, the state would have to pay the company for lost advertising revenue going years into the future. The N.C. League of Municipalities suggests the amount could be 10 times as much as is now required.

Insider’s take:  Most states require just compensation equal to the fair market value of a condemned billboard, not simply the property tax value of the billboard or the cost of the billboard when it was constructed.  If billboards trade at 5-6 times revenues or 8-10 times cashflow, of course you will have to several years worth of revenue for a sign.  That’s fair market value.   North Carolina’s existing statute is unclear as to whether fair market value or cost is the appropriate basis.  Looks to me like some legislators have decided to clear up the confusion by confirming that fair market value is the proper basis.  Someone should ask the Observer’s reporter how he’d  feel if the North Carolina Department of Transportation decided to condemn his house and offered compensation based on the depreciated cost of the house rather than the fair market value of the house.

 


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